Scandinavian Tobacco Group A/S Reports Q3 Results with Solid Cash Flow and Maintains Full-Year Guidance

Gentofte, DENMARK

Company Announcement
No. 66/2022

                                                                                                       Copenhagen, 9 November 2022

Interim report, 1 January - 30 September 2022  

Scandinavian Tobacco Group A/S Reports Q3 Results with Solid Cash Flow and Maintains Full-Year Guidance

For the third quarter of 2022 Scandinavian Tobacco Group delivered 1% negative organic net sales growth which is in-line with the Company’s performance expectations for the full year. Consumption in our categories has remained resilient in recent months, and when combined with strong price management, has resulted in organic net sales remaining relatively stable as compared to last year, despite the third quarter being impacted by the return to the pre-pandemic market mix. Increasing cost inflation across the entire value chain and continued promotional pressure in the online business is negatively impacting the Group’s EBITDA-margin. The plan to improve productivity in the supply chain is being executed, however, with high complexity in our portfolio we expect part of the issues to persist into 2023.

Q3 Highlights

  • Net sales were DKK 2,362 million (DKK 2,182 million) with -1.4% organic growth.
  • EBITDA before special items was DKK 631 million (DKK 627 million) with -6.2% organic growth. The EBITDA margin was 26.7% (28.7%). The third quarter of 2021 was positively impacted by refunds of certain duties in the US by DKK 31 million.
  • Exchange rate developments increased net sales by DKK 196 million and EBITDA before special items by DKK 43 million.
  • Adjusted Earnings Per Share (EPS) were DKK 4.4 (DKK 4.2).
  • Free cash flow before acquisitions was DKK 462 million (DKK 564 million).
  • Return on Invested Capital was 13.2% (12.9%).
  • In the first nine months of 2022, organic net sales decreased by 1.6% to DKK 6,577 million (DKK 6,221 million), EBITDA before special items decreased by 8.0% organically to DKK 1,707 million (DKK 1,759 million) and free cash flow before acquisitions was at DKK 735 million (DKK 1,086 million).

In the current environment I'm pleased with our performance for the third quarter, delivering solid cash flows and positive EPS growth, which is in-line with our financial expectations for the full year of 2022. We are driving productivity improvements in the supply chain, an issue we have faced in recent quarters which continues to be our most important short-term priority,” said CEO Niels Frederiksen.

While the supply chain issue and the current economic backdrop continue to be challenging, we are encouraged by the progress we are making on our Rolling Towards 2025 Strategy. Our new super store in San Antonio is off to a very strong start, and our Growth Incubator completed its second product launch in the third quarter, with early but encouraging results. As the unprecedented inflationary dynamics continue to play out, we will use the offsetting actions at our disposal to manage in the short-term and are confident in our ability to deliver on our long-term strategy and value aspirations for our shareholders."

Financial Guidance 2022

Consumption of our products continues to be relatively resilient, pricing remains robust throughout most product categories and markets, and the Company is making progress on improving productivity in the supply chain. Consequently, the assumption of an unchanged organic net sales development for the full year is maintained.

Based on these assumptions, the full-year guidance for 2022 is maintained:

  • EBITDA: Organic growth in the range -4% to 0%
  • Free cash flow before acquisitions in the range DKK 1.1-1.4 billion
  • Adjusted EPS >5% increase

For the fourth quarter of 2022 we expect organic net sales growth and organic EBITDA growth to resume. Organic net sales growth is expected to be driven by Europe Branded and North America Online & Retail, whereas North America Branded & Rest of World is expected to deliver declining organic net sales versus the fourth quarter of 2021. A lower OPEX-ratio is expected to support a return to organic EBITDA growth in the quarter. The bias in the expectation for organic EBITDA growth for the full year is currently included in the lower end of the guidance range.

For further information, please contact:
Torben Sand, Head of IR & Communication, phone +45 5084 7222 or
Eliza Michael, IR and Communication, phone +45 5080 7619 or

A conference call will be held on 10 November 2022 at 10.00 CEST. Dial-in information and an accompanying presentation will be available at around 09:00 CEST.



Interim Report Q3 2022